3b. Using the xtock image to make
      a full stock valuation sheet

 

  Standard "fundamental + behavioral"
     stock valuation sheet

Remember the stock for which we calculated an EEV / estimated economic value.
OK, see it?

To complete its valuation, we need its range of potential image coefficients.

=> We will see below how to find it. 

In this example, let us say that this range is 0,8 (1,2) 1,7

Valuation sheet for the stock:

        _______________________________  in Euros

EPS 5 (projected earnings per share in 5 years) 

x "Primary" P/E coefficient

  3,10

x  12

 
  46

Present gross dividend

x number of years

  1,20

x  5

 
  6

Total = EEV / Estimated economic value


  52


Minimum potential

Structural

Maximum potential

x Estimated Image coefficient x  0,8 x  1,2 x  1,7

= PMV / Potential market value

  42   62 88

Observation:
For fun, we may divide those PMV by the present EPS (2,5 Euros) 

=> This gives potential P/Es (on present earnings) of
      17 (mini) 25 (structural) and 35 (maxi)

  Make it easier: use the instant pricer

To make your calculation with your own data  for the stocks you
want to evaluate, you can use easily:

  But first, how to find this range of potential images?

Well, the potential image range appears in the next page
(images tables A + B).

Thus, in the above example:

* Using table A, we placed the stock in the "good moderately cyclical
   medium-size firms".

   For more precisions on that category, check the image types descriptions
    in page 5
.

* We chose, in table B, an image range matching that category.
   We adapted a little
the numbers, the stock having also some traits
    from another category.

separ

  A step further: simulating several scenarios

 

Stock name: ____________________   Simulation updated on: __.__.__

Pick your scenario

1

2

3

4

A - Estimated Economic Data

. EPS 5 years variation estimate (1)

+ 20 %

+ 30 %

+45%

+ 60%

. Estimated EPS in 5 years time

3.6

3.9

4.3

4.8

. Estimated normalized midcycle EPS

(2)

(2)

(2)

(2)

. Current or estim. (3) interest rate (bonds) 
. Current or estim. (3) inflation rate

4,0 %
1,0 %

. Primary P/E (see PP/E  table)

11

B - Estimated Economic Values (EEV) calculations

. EPS x primary P/E =

39,5

43

47,5

53

. Present gross dividend x 5 =

1,6 x 5 = 8

. EEV (= EPS x primary P/E + 5 x dividend)

47,5

51

55,5

61

C - Estimated Potential Image coefficients

. Image stability / structural image level  

=> Stock family

low volatility / medium level

=> classical stock

. Low image (4)

0,80 (5)

. Structural image (4)

1,20 (5)

. High image (4)

2,00 (5)

D - Estimated Potential Market Values (EPMV)

. Low EPMV (= EEV x low image)

38

41

44,5

49

. Structural EPMV (= EEV x structural  image)

57

61

66,5

73

. High EPMV (= EEV x high image)

95

102

111

122

E - Price / Value rating simulation

Current price.  Current value ratings

88

Abs: 3 / Rel: 4 (6)

(1)  In current money value (not deflated)
(2)  A theoretical data that may be used to refine comparisons, but the market does not take it much 

        into account, often the contrary.
(3)  You may use estimated rates instead of current ones if you expect important forthcoming rate changes

(4)  The narrowest (= with the least stocks) indexes, such as the CAC or DJ,  are a reference for many
        operations. 
        Stocks belonging to such "exclusive" clubs have a liquidity and notoriety above the whole market.
        Thus their prices enjoy a specific quality premium, with images about 10-25 % higher than
        those shown in B table.

(5)  We might have identical low / high image brackets in each scenario even if, more often, images tend
     
to be high when EPS are rising and low when they are falling.

(6)  1 = very expensive,  2 = expensive,  3 = rather expensive,  4 = average,  5 = rather cheap,  6 = cheap,

       7 = very cheap;  Abs = in absolute / Rel = relative to the whole market level
       (this supposes to have made in parallel a current price rating of the market, see SP 500 sim).

separ

This page last update 20/11/14
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